Michael Birch wins at Bebo with the $850million cash acquisition by AOL. Michael is a cool guy who hides his commercial drive behind his hippy looks but kept a close eye on how people arrived at Bebo and used the site. It is his fourth home run with a social network site. Bebo took the VC rocket booster of Balderton Capital, the people who were Benchmark UK. Around one year after Bebo started, Balderton invested $15million for 15.7% of the equity giving it a 9x return of $140million.
It looks easy but only the brave would have valued a near start-up at a pre-money valuation of $80million. Bebo must have had some fantastic customer engagement stats of numbers and time spent on the site. I could find no comment about an angel round and only one investor, so it was not a standard EF. When I met Michael Birch in Oxford, he said that he had to raise the fund in the UK as Bebo had little traction in the USA. But of course the skill sets he needed were in Silicon Valley where Bebo is now based.
Balderton helped to recruit Joanna Shields who is President of Bebo and staying with the AOL. I hope she picked up the standard CEO options package of 5%, worth $44million. Not bad for a couple of years slog.
Balderton should receive the standard 20% fee of the gain to their investors (($140m-$15m)*20%= $25m), some of which should end up in the pockets of the impressive and likeable George Coelho.
If Bebo also had the “standard” option pool for staff of 20% then there will be some happy people in Bebo HQ. How will AOL keep their noses to the grindstone? There must be some great stories.
Michael and his wife are leaving with the blessing of AOL who expect them to set up another stunning site. What pre-money valuation will he get next time?
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